Remedy do seem to have a tendency to focus on effects over pixel count, which I like.
There were a few games on 7th gen with dynamic resolution (In addition to Rage, Wipeout HD, Doom 3 BFG edition, Wolfenstein The New Order, and Syndicate on PS3 come to mind) but yeah it didn't really become common until the PS4/Xbone hit their stride. If I had to pick out one obstacle for last gen consoles though, I'd say it would be RAM, not GPU power. Less than 500MB of RAM available to games was a real bottleneck, especially in open world titles.
RAM was certainly a limitation long term, especially on PS3 which had less flexibility on how RAM was used. Consider 7th gen consoles had games like Crysis, Far Cry, Battlefield, Assassins Creed, GTA, Elder Scrolls, even some MMOs, etc. There The biggest RAM hog is often textures. Crossgen 7th gen games had abysmal textures likely because the game engines had less efficient use of RAM. But overall 7th gen consoles did amazing things with a small amount of RAM.
So I dont think RAM was the biggest limitation, if last gen had double the RAM then MOST games would have just had better textures. More often games struggled with performance or made significant visual compromises because of GPU limitations.
I will put it like this. If I could have chose double the RAM or GPU power for last gen, I would have opted for double the GPU power. Because more games would have utilized it better. Better resolutions (which Alan Wake needs), performance and higher quality effects. Last gen already had just enough RAM to make great open world games. Also, we have have consoles with significantly more RAM but the open world experiences haven't evolved much. You know what has improved significantly? Textures.
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